JOHANNESBURG, Oct 10 (Reuters) - A soft stance on corruption, policy flip flops and rising government spending have pushed South Africa to the bottom of investment giant Franklin Templeton’s list of emerging economies set to reap the rewards of investment in frontier markets.

All three major ratings firms cut the country’s credit after President Jacob Zuma abruptly fired Pravin Gordhan as finance minister in March, while allegations of corruption in state-owned firms along with a leadership contest in the ruling African National Congress (ANC) have also unnerved investors.

“China is obviously at the top of our list. Then India, which is growing very fast. I’d say South Africa is probably down at the bottom in terms of us wanting to put in more money,” the firm’s executive chairman Mark Mobius told Reuters on Tuesday.

The famed emerging markets investor said these issues were raising fears that Pretoria might eventually resort to exchange rate controls similar to those in Zimbabwe and Nigeria.

“When you read about all of the corruption and the inability of government to move ahead on infrastructure, that’s a real problem,” he said.

“The first thing we think of when we go into a country is can we get out. If we put money in can we get it out,” Mobius, whose firm manages over $740 billion in assets globally, said on the sidelines of an investment symposium in Johannesburg.

“If the foreign exchange situation in South Africa is getting worse and if government is spending too much you may see foreign exchange controls.”

“This is something we have to look at very carefully,” said Mobius, adding the firm was cautious about adding to its $500 million equity exposure to local companies.

South Africa recorded a monthly budget deficit of about 92 billion rand ($7 billion) in July and a 13 billion rand gap in August, making it likely the Treasury will miss its fiscal consolidation targets, already flagged by ratings firms as a major credit risk.

Last week the Reserve Bank said if it were not for the political and policy uncertainty the economy in 2016 would probably have grown by about 2 percent rather than the actual growth of 0.3 percent.

Clouding the picture further, the ANC will in December choose a new party leader to succeed Zuma, whose eight-year tenure has been riddled with corruption scandals. Zuma denies any wrongdoing.

A victory by a Zuma-linked candidate would definitely turn off investors, Mobius added.

“A lot will depend on what happens at the end of the year with the ANC elections,” Mobius said.